New Zealand’s International Airfares Set To Increase As Departure Tax Is Coming

Air passengers flying in and out of New Zealand will have to pay more. This follows the proposal to introduce "departure tax" of NZ$22. This proposal came up in the Government Budget presented on May 21. The new tax will be a "border clearance levy" of $16 for arriving passengers and $6 for departing passengers. It will be effective from early 2016 and the exact amount will be finalised after public consultation. The new proposal has drawn protests from the travel and tourism sectors.

For air travelers, the new tax comes on top of many other airport charges already in existence. For example, Auckland International Airport charges each airline $25 for every passenger as service charge towards payment of terminal and infrastructure costs. Other New Zealand international airports also levy similar charges. Some other aviation related taxes include NZ $1.50 in Civil Aviation Fee and NZ $12 as Aviation Security Service fee, reports Stuff.Co.Nz

Targets $100 Million

Justifying the new tax, Primary Industries minister Nathan Guy said the new tax will be used for pest control, disease, illegal drug and contraband border protection. The government is aiming to earn at least NZ $100 million per year to meet the costs of passenger border clearance by 2017. According to official estimates, the target is plausible given the growth in arrivals of air passengers has been more than 18 percent from 4.4 million in 2009 to 5.2 million in 2014 and it will sustain at about 3.5 percent each year. Customs Minister Nicky Wagner said the new charges will bring passenger clearance in line with clearing cargo imports, which is already supported by levies and fees.

However, Air New Zealand spokeswoman Brigitte Ransom expressed disappointment at the new charges and said the airline was taken by surprise. "The $6 for departing passengers and $16 for arriving passengers will add to the cost of an airline ticket," Ransom pointed out.

Unjustified

Kevin Ward, Chief Executive of NZ Airports Association said he was surprised and disappointed as it is a blow to tourism. He said the tax of an extra $16 for arriving passengers and $6 for departing passengers, when combined with existing Government charges, will cost around NZ$36 for a return journey from Australia to New Zealand. He said it will ultimately turn into a disincentive and visitors will think twice about wanting to visit New Zealand.

John Beckett, executive director of Board of Airline Representatives also expressed anguish at the new charges and said it would be harmful to the tourism industry. Tourism Industry Association New Zealand chief executive Chris Roberts said he does not see any justification for the new tax.

New Zealand Herald reports that the tourism industry has been taken by surprise as Prime Minister John Key, who holds the Tourism portfolio, did not throw any hint of the new tax when he addressed the industry's summit in Rotorua on May 20, noted Tourism Export Council's chief executive Lesley Immink.

(For feedback/comments, contact the writer at k.kumar@ibtimes.com.au)